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Exploit or Failure?As Harmony Proposes Issuing ONE Tokens to Reimburse Victims of $8M Hack that occurred about 1-month ago, we see a less than bright future for this layer-1 bridge.The value of decentralized Ethereum bridges amounts to $8bn as of time of writing and allows users to transfer assets based on dedicated liquidity pools. The liquidity providers are decentralized and are sharing transaction revenues via the respective bridge-native token.
This once was also the value proposition of the Harmony Bridge, which had as much as $250m USD in liquidity on chain.
Rather than the fatality of a successful exploit, we see the looming demise of Harmony Bridge as a contagion effect of the UST de-peg. The event that initiated a major rout across crypto-names, also shows how decentralization does not immunize against transmission of financial shocks. In fact the Harmony Bridge function focused essentially on bridging assets to the Terra-Luna ecosystem. In fact the crash led to a 80% decrease of transaction volumes on the Harmony ONE token within a week. With the unfolding of the UST crash so did the transactions of the Harmony Bridge. As the size of the cake has decreased, the holders of Harmony ONE token are already sitting on the loss (as much as 90% since beginning of May).
The proposal to increase the supply of ONE is basically the rug-pull after the rug-pull!